In the frenetic early months of the coronavirus pandemic, the CEOs of Canada’s big banks privately huddled together at least twice weekly with central bankers, regulators and government officials. Their calls helped policy makers take the economy’s pulse and allowed the country’s top bankers to weigh in on how relief programs could be built at breakneck speed to prop up reeling businesses and households.
At the same time, Royal Bank of Canada CEO Dave McKay was making his case to anyone who would listen in interviews, opinion pieces and posts on LinkedIn. “We can’t screw this up,” he warned in an April interview with The Globe and Mail. He urged governments to make more business loans partly forgivable, suggested a system to pace the reopening of shuttered businesses, and pressed Canadians to embrace smartphone-based tracking to control COVID-19 outbreaks and even to wear masks.
Bankers and policy-makers “didn’t always agree on what would be the cause and effect of various policies. And we had, I think, healthy debate over March and April,” McKay says. “Sometimes our ideas were listened to and were incorporated into policy...and sometimes they weren’t. But I think that’s part of the process—that you’re at the table, and you have a perspective.”
As the head of Canada’s largest bank, McKay already had his hands full navigating an economic calamity. But he says he felt a weighty responsibility to translate the deep insights RBC gathers about its clients across the country—from large corporations to individual households—in a way that could influence policy. He has pressed his case for causes that matter throughout his tenure and has not shied away from the bully pulpit in a time of crisis.
“I do get nasty responses,” he says, most often when opining about the future of the energy sector. But speaking to a wider audience helps him get policy-makers’ attention, allowing him “to poke and prod a little bit, to say, ‘Here’s an opinion I feel really strongly about, and you may or may not have listened,’” he says.
“He has opinions, and he’s not scared to communicate them,” says Michael Medline, CEO of Empire Co. Ltd., which owns grocery chain Sobeys Inc. “You know, some of these things you look back on and think, Oh yeah, of course he could do that. But they were courageous at the time.”
Since McKay took over as RBC’s CEO in 2014, he has worked to shift the bank’s approach to corporate citizenship. “We were really kind of a shareholder maximization organization,” he says, and he wanted to balance investors’ interests more evenly with the needs of the bank’s clients, employees and the communities in which they work.
When McKay first presented this softer style of capitalism to the bank’s most senior leaders early in his tenure, it struck some as radical. “I saw some people almost fall off their chairs,” he says. “Like, ‘What’s he talking about?’”
The bank’s investors can hardly complain: RBC leads Canada’s Big Five banks in total returns over the past five years. And it has so far weathered the crisis better than many institutions. Even after setting aside $3.5-billion over two quarters to absorb potential losses and deferring payments on $60-billion in loans, RBC has maintained robust capital reserves and saw its third-quarter profits rebound to $3.2-billion—just shy of pre-pandemic levels.
McKay contends the more balanced approach to corporate citizenship allows RBC to focus more on longer-term performance and to tie the bank’s success to progress for all of Canada.
“I think Dave’s actually a policy wonk at heart,” says Stephen Poloz, who was governor of the Bank of Canada until early June and now serves as a special adviser to the law firm Osler, Hoskin and Harcourt LLP. “He always thinks of things in that frame.”
McKay also wanted to concentrate the bank’s philanthropy, which he says was “spread like peanut butter across thousands of things.” He remembers watching telecommunications giant BCE Inc. throw its weight behind mental health initiatives to great effect under former CEO George Cope. “Part of that was a learning for me to say we’re not making a big enough difference,” he says. “We’re spending over $100-million a year, and it’s having an impact. But could we have twice the impact of what we’re doing today? And my team agreed.”
Since then, RBC has focused its giving on preparing a younger generation for a rapidly evolving job market—a mission rooted in McKay’s own experience.
He grew up in Montreal, where his family ran a small lighting and furniture business. When he was 13, his father died and his mother took charge while raising three children. “I had no connections into the business world,” he says. He studied at the University of Waterloo, attracted by its co-operative education program.
His first co-op placement was a coding job in RBC’s technology department. “That’s how I got into RBC, and that was the great democratizer,” McKay says.
His experiences helped shape his conviction in placing RBC’s biggest philanthropic bet. RBC Future Launch is a 10-year, $500-million initiative that aims to help three million students learn skills, get work experience and build professional networks. It consumes nearly 40 per cent of RBC’s $130-million budget for community giving.
McKay has carried that focus on employment and economic opportunity into RBC’s response to the pandemic. In late March, he announced RBC would not cut any jobs in 2020 because of COVID-19. Other banks quickly followed suit; McKay says it wasn’t a co-ordinated effort.
Then, as civil unrest over the killing of George Floyd by a Minneapolis police officer sparked a wave of awareness about systemic racism and bias, RBC was the first of several banks to set more ambitious targets for diversity and inclusion. McKay acknowledged the bank’s own blind spots, pledging that at least 30% of new hires and promotions to executive roles will be visible minorities. The banks also earmarked $100 million in loans for Black entrepreneurs.
And as a second wave of COVID-19 infections spreads through some of Canada’s largest provinces and cities, McKay has been vocal about the need to protect small businesses, arguing there is no more urgent priority than for governments and business leaders to safeguard the country’s long-term health. “While his company is big business, his mindset is to take care of small business,” says Calin Rovinescu, CEO of Air Canada. “He is probably being Canada’s most vocal spokesperson for the SME sector, and that is pretty unique.”
In late August, RBC co-ordinated a three-day initiative called Canada United, backed by 70 corporate brands and 44 municipalities, that promoted local businesses and raised $14-million for a relief fund that provides $5,000 grants to help cover fixed costs and the shift to digital sales.
Now he’s looking to rally corporate Canada once again and build a sustained initiative to help small businesses through the recovery.
“Main Street is what makes this country go. They are being left behind. They don’t have infinite resources to sustain themselves for a long period of time, and we need to do something,” McKay says. “This is important for Canada.”
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